solutionIt can be a difficult process to decide whether to file a bankruptcy.  A bankruptcy could positively affect your quality of life by discharging certain debts and providing you with a fresh start.  Here is a list of pros and cons to consider as you decide whether Chapter 7 bankruptcy is the best option for you.


Cons Pros
Effect on your credit ·         Bankruptcy could negatively affect your credit.·         Chapter 7 bankruptcy remains on your credit report for up to 10 years. ·         Bankruptcy may be the quickest way to “reset” and rebuild your credit.·         If your credit score is already bad or mediocre, a bankruptcy will likely improve it.
Effect on property you own ·         You may lose some unprotected property, but… ·         Bankruptcy protects most of your property through “exemptions.”
Obtaining a mortgage ·         You must wait 2 years from the date of discharge to obtain an FHA or VA mortgage loan. ·         It could take significantly more than 2 years to clean up your credit yourself and qualify for a mortgage.
Debts discharged in bankruptcy ·         A Chapter 7 bankruptcy will not discharge student loans, domestic support obligations, or most tax debts. ·        A Chapter 7 bankruptcy discharges unsecured debts (e.g., credit cards, medical bills, personal loans, etc.).·         Discharging unsecured debt may free up funds to pay your non-dischargeable debts.
Effect on secured debts (e.g., mortgage or auto loan) ·         A Chapter 7 bankruptcy generally does not modify liens against property (e.g., mortgage against your home or auto loan).·         If you fail to make ongoing payments, the lender can foreclose on your house or repossess your car. ·         You can keep your house or car so long as you continue making your monthly payments.·         You can get out from under secured debts if you are willing to “surrender” the collateral to the lender.
Effect of a previous bankruptcy ·         If you filed a previous Chapter 7 case within the past 8 years, you will not qualify for Chapter 7 bankruptcy. ·         You may qualify for a Chapter 13 bankruptcy if at least 5 years have passed.
Income and qualifying for Chapter 7 ·         If your income is too high, based on the average monthly income for your household size, you may not qualify for a Chapter 7 bankruptcy. ·You may still file a Chapter 13 bankruptcy.

·         You might still qualify for Chapter 7, even if your income is above average, if your income fluctuates or you have other extenuating circumstances.